Manufacturer-Dealer Business RelationshipsRight on cue, the Wall Street Journal published an article in today's edition that offers reinforcement for points covered in a recent post on the potential for nurturing joint dependence to improve performance of both a manufacturer and a partner company, such as a supplier.
The WSJ article, by Eric Johnson, a professor at Dartmouth's Tuck School of Business, and Robert Batt, a PhD candidate at Wharton, looks at the relationship between manufacturers and dealers. The recommendations Johnson and Batt offer track closely with those that grow out of the research by Maxim Sytch and Ranjay Gulati discussed in the earlier post.
Based on three years of interviews and field research, Johnson and Batt recommend a strategy of building long-term sales and profits by strengthening manufacturer-dealer relationships. This approach has three elements:
- Strengthening the best dealers This can mean culling weaker dealerships in order to provide scope for the stronger dealerships to grow. Providing dealer training can be a big help in positioning the remaining dealers for solid success.
- Supporting dealer profitability This means developing products that can be sold at good margins and that crowd out competitors.
- Incorporating dealers in company culture Manufacturers should take positive steps to enlist their dealers in achieving the company's mission in a way that aligns with the company's culture. This generally involves such contributions as training, merchandising support, and promotions. Other relationship-building activities, such as sales conferences and joint sales planning, are also productive.